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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Harry Simpson who wrote (1475)	2/6/1998 11:02:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 164684

Well, I will reiterate my previous posts. For some reason the communication is just not here. I made the "off-handed" comment about Amazon being able to renegotiate their A/P. Like I said in my previous post, this does not mean that Amazon will do this or that it is a good idea for Amazon to take this approach to business. I was offering in my original post, abliet in what some would consider an obtuse (actually cynical) fashion, an observation that Amazon may be able to negotiate very desirable terms with their supplier. This would make possible further discounts on goods like CDs, a filling and shipping procedure with the supplier that would not necessitate this company in having a very large inventory, and so forth. So through what they can negotiate with their suppliers such as for the CDs, they can have a measure of control over their costs associated with carrying and shipping of this type of product. This can amount to a substantial savings of money and a lower bottom line in cost. As far as the practice of renegotiating A/P accounts with suppliers, there are many companies doing this, and some companies that are taking this approach like B.Dalton as part of their regular business practices. Walden books also approaches business this way at least before Borders purchased them. They learned about this practice from the example provided by B. Dalton. So as you see, this is "business as usual" for many companies, including some industry leaders. Once again, I am not saying I would personally take this approach if I was in their position. I am saying that this does happen much more than many realize, and nobody should be surprised at all that this does happen. For once companies become large enough to end up as a significant part of a supplier's revenue, many use this to their advantage and the issue over "ethics" or "relationship" is a non-issue with them. Why? I think at this point many of you can figure this out. This is because their supplier knows that if they lose a large account, it can hit their profits substantially. So this is why large companies get away with this practice. So in no way am I saying Amazon is doing this, going to do this, or will ever consider doing this. Also, I am not saying that this renegotiation of A/P leads to healthy business relationship. I am saying that once a company becomes a significant part of another company's revenue (and profits), they carry allot of weight with that company. They can also choose to be very agressive in throwing that weight around and they will get away with it. And this approach will not lead to higher interest rates on their loan with the bank, or impact anything else outside of their relationship with their supplier. This has been going on with B. Dalton for over lets say 15 years, and it had been the business practice of Walden for at least half that period of time. I do not know i this is the case now since Borders has purchased them. I think I will need to lurk for a period of time to see the type of reader and group of people I am dealing with here in terms of their backgrounds, approach to investing, and experience level on this thread so I can converse more clearly with all of you here. I think I jumped in too quickly which has caused misunderstandings. I will conclude by saying that I have personally witnessed business practices by different companies that makes this one look pretty insignificant as far as an ethical issue. I am used to seeing this type of approach to business happen often. I have even quit one company where unethical business practices was one of my major reasons for leaving. My departure actually lead to the eventual firing of the division manager for a consulting company since many of their other software engineers followed me out. So I guess we may have had very different experiences in the business world. Bob Graham